Prudential has taken the unprecedented step of setting up an independent committee to oversee the running of its 69bn with-profits fund to restore confidence in with-profits.
Around a third of Pru’s new business flows in 2003 came from this product so the life office is keen to restore consumer confidence.
The three-person committee will monitor Pru’s adherence to its principles and practices of fund management and assess the management of the fund and how this is balanced against shareholder interests.
The committee will report to the Pru board every quarter. Its initial membership comprises First Church Estates Commissioner and The Inde-pen-dent newspaper founding editor Andreas Whit-tam Smith, Milliman head of life Michael Arnold and former Tillinghast-Towers Perrin principal and Institute of Actuaries president Jeremy Goford. The committee line-up will be reviewed every three years.
Pru UK chief executive Mark Wood says the committee should boost existing policyholders confidence in the product and IFAs’ in selling it. He stresses that the committee is free to raise any issues direct with the regulator before the Pru board.
Cazalet Consulting principal Ned Cazalet says that although the Pru with-profits fund has very strong performance numbers, it will be difficult to rebuild trust as the products tend to be tarred with the same brush.
Wood says: “Our customer base describe with-profits when asked what savings product they would like but the concept is so tarnished that it is almost shorthand for poor performance.”